AB 2823, as amended, Gatto. Political Reform Act of 1974: economic interest disclosure.
The Political Reform Act of 1974 prohibits a public official at any level of state or local government from making, participating in making, or in any way attempting to use his or her official position to influence a governmental decision in which the public official knows or has reason to know that he or she has a financial interest. A public official has a financial interest in a governmental decision if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on a business entity in which the public official has a direct or indirect investment worth $2,000 or more, real property in which the public official has a direct or indirect interest worth $2,000 or more, or a source of income aggregating $500 or more in value within 12 months before the time when the decision is made.
The Political Reform Act of 1974 requires persons holding specified public offices to file disclosures of investments, real property interests, and income within specified periods of assuming or leaving office, and annually while holding the office. The act requires the disclosures to include a statement indicating, within a specified value range, the fair market value of investments or interests in real property and the aggregate value of income received from a source.
This bill would increase the thresholds at which a public official has a disqualifying financial interest in a source of income from $500 to $1,000, in investments in business entities from $2,000 to $5,000, and in interests in real property from $2,000 to $10,000.
This bill would make conforming adjustments to the thresholds at which income, investments, and interests in real property must be disclosed on a public official’s statement of economic interests. The bill would also revise the dollar amounts associated with the value ranges for reporting the value of economic interests.
begin insertThis bill would delay the operation of these provisions to January 1, 2018.
end insertExisting law makes a knowing or willful violation of the act a misdemeanor and subjects offenders to criminal penalties.
By creating additional crimes, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.
This bill would declare that it furthers the purposes of the act.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
begin insertSection 82033 of the end insertbegin insertGovernment Codeend insertbegin insert is
2amended to read:end insert
begin insert(a)end insertbegin insert end insert “Interest in real property” includes any leasehold,
2beneficial or ownership interest or an option to acquire such an
3interest in real property located in the jurisdiction owned directly,
4indirectly or beneficially by the public official, or other filer, or
5his or her immediate family if the fair market value of the interest
6is two thousand dollars ($2,000) or more. Interests in real property
7of an individual includes a pro rata share of interests in real
8property of any business entity or trust in which the individual or
9immediate family owns, directly, indirectly or
beneficially, a
1010-percent interest or greater.
11
(b) This section shall remain in effect only until January 1, 2018,
12and as of that date is repealed, unless a later enacted statute, that
13is enacted before January 1, 2018, deletes or extends that date.
Section 82033 of the Government Code is amended
16to read:
begin insert(a)end insertbegin insert end insert “Interest in real property” includes any leasehold,
18beneficial or ownership interest, or an option to acquire such an
19interest in real property located in the jurisdiction owned directly,
20indirectly, or beneficially by the public official, or other filer, or
21his or her immediate family if the fair market value of the interest
22is ten thousand dollars ($10,000) or more. Interests in real property
23of an individual includes a pro rata share of interests in real
24property of any business entity or trust in which the individual
or
25immediate family owns, directly, indirectly, or beneficially, a
2610-percent interest or greater.
27
(b) This section shall become operative on January 1, 2018.
begin insertSection 82034 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
29read:end insert
begin insert(a)end insertbegin insert end insert “Investment” means any financial interest in or
31security issued by a business entity, including, but not limited to,
32common stock, preferred stock, rights, warrants, options, debt
33instruments, and any partnership or other ownership interest owned
34directly, indirectly, or beneficially by the public official, or other
35filer, or his or her immediate family, if the business entity or any
36parent, subsidiary, or otherwise related business entity has an
37interest in real property in the jurisdiction, or does business or
38plans to do business in the jurisdiction, or has done
business within
39the jurisdiction at any time during the two years prior to the time
40any statement or other action is required under this title. An asset
P4 1shall not be deemed an investment unless its fair market value
2equals or exceeds two thousand dollars ($2,000). The term
3“investment” does not include a time or demand deposit in a
4financial institution, shares in a credit union, any insurance policy,
5interest in a diversified mutual fund registered with the Securities
6and Exchange Commission under the Investment Company Act
7of 1940 or in a common trust fund created pursuant to Section
81564 of the Financial Code, interest in a government
9defined-benefit pension plan, or any bond or other debt instrument
10issued by any government or government agency. Investments of
11an individual includes a pro rata share of investments of any
12business entity, mutual fund, or trust in which the individual or
13immediate family owns, directly, indirectly, or beneficially, a
1410-percent interest or greater. The term “parent,
subsidiary or
15otherwise related business entity” shall be specifically defined by
16regulations of the commission.
17
(b) This section shall remain in effect only until January 1, 2018,
18and as of that date is repealed, unless a later enacted statute, that
19is enacted before January 1, 2018, deletes or extends that date.
Section 82034 of the Government Code is amended
22to read:
begin insert(a)end insertbegin insert end insert “Investment” means any financial interest in, or
24security issued by, a business entity, including common stock,
25preferred stock, rights, warrants, options, debt instruments, and
26any partnership or other ownership interest owned directly,
27indirectly, or beneficially by the public official, or other filer, or
28his or her immediate family, if the business entity or any parent,
29subsidiary, or otherwise related business entity has an interest in
30real property in the jurisdiction, or does business or plans to do
31business
in the jurisdiction, or has done business within the
32jurisdiction at any time during the two years before the time any
33statement or other action is required under this title. An asset shall
34not be deemed an investment unless its fair market value equals
35or exceeds five thousand dollars ($5,000). The term “investment”
36does not include a time or demand deposit in a financial institution,
37shares in a credit union, an insurance policy, interest in a diversified
38mutual fund registered with the Securities and Exchange
39Commission under the Investment Company Act of 1940 (15
40U.S.C. Sec. 80a-1 et seq.) or in a common trust fund created
P5 1pursuant to Section 1585 of the Financial Code, interest in a
2government defined-benefit pension plan, or a bond or other debt
3instrument issued by any government or government agency.
4Investments of an individual includes a pro rata share of
5investments of any business
entity, mutual fund, or trust in which
6the individual or immediate family owns, directly, indirectly, or
7beneficially, a 10-percent interest or greater. The term “parent,
8subsidiary, or otherwise related business entity” shall be
9specifically defined by regulations of the commission.
10
(b) This section shall become operative on January 1, 2018.
begin insertSection 87103 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
12read:end insert
begin insert(a)end insertbegin insert end insert A public official has a financial interest in a
14decision within the meaning of Section 87100 if it is reasonably
15foreseeable that the decision will have a material financial effect,
16distinguishable from its effect on the public generally, on the
17official, a member of his or her immediate family, or on any of
18the following:
19(a)
end delete
20begin insert(1)end insert Any business entity in which the public official has a direct
21or indirect investment worth two thousand dollars ($2,000) or
22more.
23(b)
end delete
24begin insert(2)end insert Any real property in which the public official has a direct
25or indirect interest worth two thousand dollars ($2,000) or more.
26(c)
end delete
27begin insert(3)end insert Any source of income, except gifts or loans by a
commercial
28lending institution made in the regular course of business on terms
29available to the public without regard to official status, aggregating
30five hundred dollars ($500) or more in value provided or promised
31to, received by, the public official within 12 months prior to the
32time when the decision is made.
33(d)
end delete
34begin insert(4)end insert Any business entity in which the public official is a director,
35officer, partner, trustee, employee, or holds any position of
36management.
37(e)
end delete
38begin insert(5)end insert Any donor of, or any intermediary or agent for a donor of,
39a gift or gifts aggregating two hundred fifty dollars ($250) or more
40in value provided to, received by, or promised to the public official
P6 1within 12 months prior to the time when the decision is made. The
2amount of the value of gifts specified by this subdivision shall be
3adjusted biennially by the commission to equal the same amount
4determined by the commission pursuant to subdivision (f) of
5Section 89503.
6For purposes of this section, indirect investment or interest means
7any investment or interest owned by the spouse or dependent child
8of a public official, by an agent on behalf of a public official, or
9by a business entity or trust in which the official, the official’s
10agents, spouse, and dependent children own directly, indirectly,
11or beneficially a 10-percent interest or greater.
12
(b) This section shall remain in effect only until January 1, 2018,
13and as of that date is repealed, unless a later enacted statute, that
14is enacted before January 1, 2018, deletes or extends that date.
Section 87103 of the Government Code is amended
17to read:
begin insert(a)end insertbegin insert end insert A public official has a financial interest in a
19decision within the meaning of Section 87100 if it is reasonably
20foreseeable that the decision will have a material financial effect,
21distinguishable from its effect on the public generally, on the
22official, a member of his or her immediate family, or on any of
23the following:
24(a)
end delete
25begin insert(1)end insert Any business entity in which the public official has a direct
26or indirect investment worth five thousand dollars ($5,000) or
27more.
28(b)
end delete
29begin insert(2)end insert Any real property in which the public official has a direct
30or indirect interest worth ten thousand dollars ($10,000) or more.
31(c)
end delete
32begin insert(3)end insert Any source of income, except gifts or loans by a commercial
33lending institution made in the regular course of business on terms
34available to the public without regard to official status, aggregating
35one thousand dollars ($1,000) or more in value provided to,
36promised to, or received by the public official within 12 months
37before the time when the decision is made.
38(d)
end delete
P7 1begin insert(4)end insert Any business entity in which the public official is a director,
2officer,
partner, trustee, employee, or holds a position of
3management.
4(e)
end delete
5begin insert(5)end insert Any donor of, or any intermediary or agent for a donor of,
6a gift or gifts aggregating two hundred fifty dollars ($250) or more
7in value provided to, received by, or promised to the public official
8within 12 months before the time when the decision is made. The
9amount of the value of gifts specified by this subdivision shall be
10adjusted biennially by the commission to equal the same amount
11determined by the commission pursuant to subdivision (f) of
12Section 89503.
13For purposes of
this section, indirect investment or interest means
14any investment or interest owned by the spouse or dependent child
15of a public official, by an agent on behalf of a public official, or
16by a business entity or trust in which the official, the official’s
17agents, spouse, and dependent children own directly, indirectly,
18or beneficially a 10-percent interest or greater.
19
(b) This section shall become operative on January 1, 2018.
begin insertSection 87206 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
21read:end insert
begin insert(a)end insertbegin insert end insert If an investment or an interest in real property is
23required to be disclosed under this article, the statement shall
24contain:
25(a)
end delete26begin insert(1)end insert A statement of the nature of the investment or interest.
27(b)
end delete
28begin insert(2)end insert The name of the business entity in which each investment
29is held, and a general description of the business activity in which
30the business entity is engaged.
31(c)
end delete32begin insert(3)end insert The address or other precise location of the real property.
33(d)
end delete
34begin insert(4)end insert A statement whether the fair market value of the investment
35or interest in real property equals or exceeds two thousand dollars
36($2,000) but does not exceed ten thousand dollars ($10,000),
37whether it exceeds ten thousand dollars ($10,000) but does not
38exceed one hundred thousand dollars ($100,000), whether it
39exceeds one hundred thousand dollars ($100,000) but does not
P8 1exceed one million dollars ($1,000,000), or whether it exceeds one
2million dollars ($1,000,000).
3(e)
end delete
4begin insert(5)end insert In the case of a statement filed under Sections 87203 or
587204, if the investment or interest in real property was partially
6or wholly acquired or disposed of during the period covered by
7
the statement, the date of acquisition or disposal.
8(f)
end delete
9begin insert(6)end insert For purposes of disclosure under this article, “interest in real
10property” does not include the principal residence of the filer or
11any other property which the filer utilizes exclusively as the
12personal residence of the filer.
13
(b) This section shall remain in effect only until January 1, 2018,
14and as of that date is repealed, unless a later enacted statute, that
15is enacted before January 1, 2018, deletes or extends that date.
Section 87206 of the Government Code is amended
18to read:
begin insert(a)end insertbegin insert end insert If an investment is required to be disclosed under
20this article, the statement shall contain all of the following:
21(a)
end delete22begin insert(1)end insert A statement of the nature of the investment.
23(b)
end delete
24begin insert(2)end insert The name of the business entity in which each investment
25is held, and a general description of the business activity in which
26the business entity is engaged.
27(c)
end delete
28begin insert(3)end insert A statement indicating which of the following represents
29the fair market value of the investment:
30(1)
end delete
31begin insert(A)end insert At least five thousand dollars ($5,000) but not greater than
32ten thousand dollars ($10,000).
33(2)
end delete
34begin insert(B)end insert Greater than ten thousand dollars ($10,000) but not greater
35than fifty thousand dollars ($50,000).
36(3)
end delete
37begin insert(C)end insert Greater than fifty thousand dollars ($50,000) but not greater
38than one hundred thousand dollars ($100,000).
39(4)
end delete
P9 1begin insert(D)end insert Greater than one hundred thousand dollars ($100,000) but
2not greater than two hundred fifty thousand dollars ($250,000).
3(5)
end delete
4begin insert(E)end insert Greater than two hundred fifty
thousand dollars ($250,000)
5but not greater than five hundred thousand dollars ($500,000).
6(6)
end delete
7begin insert(F)end insert Greater than five hundred thousand dollars ($500,000) but
8not greater than one million dollars ($1,000,000).
9(7)
end delete
10begin insert(G)end insert Greater than one million dollars ($1,000,000) but not greater
11than two
million dollars ($2,000,000).
12(8)
end delete13begin insert(H)end insert Greater than two million dollars ($2,000,000).
14(d)
end delete
15begin insert(4)end insert In the case of a statement filed under Section 87203 or
1687204, if the investment was partially or wholly acquired or
17disposed of during the period covered by the statement, the date
18of acquisition
or disposal.
19
(b) This section shall become operative on January 1, 2018.
Section 87206.5 is added to the Government Code, to
22read:
(a) If an interest in real property is required to be
24disclosed under this article, the statement shall contain all of the
25following:
26(1) A statement of the nature of the interest.
27(2) The address or other precise location of the real property.
28(3) A statement indicating which of the following represents
29the fair market value of the interest in real property:
30(A) At least ten thousand dollars ($10,000) but not greater than
31one hundred thousand dollars ($100,000).
32(B) Greater than one hundred thousand dollars ($100,000) but
33not greater than two hundred fifty thousand dollars ($250,000).
34(C) Greater than two hundred fifty thousand dollars ($250,000)
35but not greater than five hundred thousand dollars ($500,000).
36(D) Greater than five hundred thousand dollars ($500,000) but
37not greater than seven hundred fifty thousand dollars ($750,000).
38(E) Greater than seven hundred fifty thousand dollars ($750,000)
39but not greater than one million dollars ($1,000,000).
P10 1(F) Greater than one million dollars ($1,000,000) but not greater
2than two million dollars ($2,000,000).
3(G) Greater than two million dollars ($2,000,000).
4(4) In the case of a statement filed under Section 87203 or
587204, if the interest in real property was partially or wholly
6acquired or disposed of during the period covered by the statement,
7the date of acquisition or disposal.
8(b) For purposes of disclosure under this article, “interest in real
9property” does not include the principal residence of the filer or
10any other property that the filer uses exclusively as the personal
11residence of the filer.
12
(c) This section shall become operative on January 1, 2018.
begin insertSection 87207 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
14to read:end insert
(a) If income is required to be reported under this
16article, the statement shall contain, except as provided in
17subdivision (b):
18(1) The name and address of each source of income aggregating
19five hundred dollars ($500) or more in value, or fifty dollars ($50)
20or more in value if the income was a gift, and a general description
21of the business activity, if any, of each source.
22(2) A statement whether the aggregate value of income from
23each source, or in the case of a loan, the highest amount owed to
24each source, was at least five hundred dollars ($500) but did not
25exceed one thousand dollars ($1,000), whether it was in excess of
26one thousand dollars ($1,000) but was not greater than ten thousand
27
dollars ($10,000), whether it was greater than ten thousand dollars
28($10,000) but not greater than one hundred thousand dollars
29($100,000), or whether it was greater than one hundred thousand
30dollars ($100,000).
31(3) A description of the consideration, if any, for which the
32income was received.
33(4) In the case of a gift, the amount and the date on which the
34gift was received, and the travel destination for purposes of a gift
35that is a travel payment, advance, or reimbursement.
36(5) In the case of a loan, the annual interest rate, the security,
37if any, given for the loan, and the term of the loan.
38(b) If the filer’s pro rata share of income to a business entity,
39including income to a sole proprietorship, is required to be reported
40under this article, the
statement shall contain:
P11 1(1) The name, address, and a general description of the business
2activity of the business entity.
3(2) The name of every person from whom the business entity
4received payments if the filer’s pro rata share of gross receipts
5from that person was equal to or greater than ten thousand dollars
6($10,000) during a calendar year.
7(c) If a payment, including an advance or reimbursement, for
8travel is required to be reported pursuant to this section, it may be
9reported on a separate travel reimbursement schedule which shall
10be included in the filer’s statement of economic interest. A filer
11who chooses not to use the travel schedule shall disclose payments
12for travel as a gift, unless it is clear from all surrounding
13circumstances that the services provided were equal to or greater
14in value than the
payments for the travel, in which case the travel
15may be reported as income.
16
(d) This section shall remain in effect only until January 1, 2018,
17and as of that date is repealed, unless a later enacted statute, that
18is enacted before January 1, 2018, deletes or extends that date.
Section 87207 of the Government Code is amended
21to read:
(a) Except as provided in subdivision (b), if income is
23required to be reported under this article, the statement shall contain
24all of the following:
25(1) The name and address of each source of income aggregating
26
one thousand dollars ($1,000) or more in value, or fifty dollars
27($50) or more in value if the income was a gift, and a general
28description of the business activity, if any, of each source.
29(2) A statement indicating which of the following represents
30the aggregate value of income from each source, or in the case of
31a loan, the highest amount owed to each source:
32(A) At least one thousand dollars ($1,000) but not greater than
33ten thousand dollars ($10,000).
34(B) Greater than ten thousand dollars ($10,000) but not greater
35than fifty thousand dollars ($50,000).
36(C) Greater than fifty thousand dollars ($50,000) but not greater
37than one hundred thousand
dollars ($100,000).
38(D) Greater than one hundred thousand dollars ($100,000) but
39not greater than two hundred fifty thousand dollars ($250,000).
P12 1(E) Greater than two hundred fifty thousand dollars ($250,000)
2but not greater than five hundred thousand dollars ($500,000).
3(F) Greater than five hundred thousand dollars ($500,000).
4(3) A description of the consideration, if any, for which the
5income was received.
6(4) In the case of a gift, the amount and the date on which the
7gift was received, and the travel destination for purposes of a gift
8that is a travel payment, advance, or reimbursement.
9(5) In the case of a loan, the annual interest rate, the security,
10if any, given for the loan, and the term of the loan.
11(b) When the filer’s pro rata share of income to a business entity,
12including income to a sole proprietorship, is required to be reported
13under this article, the statement shall contain:
14(1) The name, address, and a general description of the business
15activity of the business entity.
16(2) The name of every person from whom the business entity
17received payments if the filer’s pro rata share of gross receipts
18from that person was equal to or greater than ten thousand dollars
19($10,000) during a calendar year.
20(c) begin deleteWhen end deletebegin insertIf end inserta payment, including an advance or reimbursement,
21for travel is required to be reported pursuant to this section, it may
22be reported on a separate travel reimbursement schedule, which
23shall be included in the filer’s statement of economic interests. A
24filer who chooses not to use the travel schedule shall disclose
25payments for travel as a gift, unless it is clear from all surrounding
26circumstances that the services provided were equal to or greater
27in value than the payments for the travel, in which case the travel
28may be reported as income.
29
(d) This section shall become operative on
January 1, 2018.
No reimbursement is required by this act pursuant to
32Section 6 of Article XIII B of the California Constitution because
33the only costs that may be incurred by a local agency or school
34district will be incurred because this act creates a new crime or
35infraction, eliminates a crime or infraction, or changes the penalty
36for a crime or infraction, within the meaning of Section 17556 of
37the Government Code, or changes the definition of a crime within
38the meaning of Section 6 of Article XIII B of the California
39Constitution.
The Legislature finds and declares that this bill
3furthers the purposes of the Political Reform Act of 1974 within
4the meaning of subdivision (a) of Section 81012 of the Government
5Code.
O
96